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The M&S flagship at Marble Arch and Selfridges are neighbours on Oxford Street. I can remember when going from one to the other was an object lesson in good and bad retailing. One store didn’t just represent the leading edge thinking of UK retailing but was at the top of the industry globally. That good and bad remains as stark, but the two companies have swapped places.

M&S has lost its way badly. Much of what made it really special has been allowed to erode and today, has all but disappeared. Food remains a good business, a leading innovator with dynamic ranging. However, management aspires to be the family supermarket it actually has never been. The (in my opinion ill-judged) deal with Ocado will add loads of product, most of which is of markedly lower quality and which in any case most stores do not have the space to accommodate. Clothing lacks style, isn’t sure who it is aimed at and finding any natural fibres in garments is increasingly difficult. Cutting costs has translated to a progressive decline in fabric and general product quality.

Selfridges is the polar opposite. One or two steps inside the door and you can feel the buzz. There is a constant energy around the store. Footfall these days is many times that of M&S Marble Arch. Of course, the nature of the store attracts lots of “window shoppers” but nevertheless, the numbers translate to vastly superior sales densities. And Selfridges never rests on its laurels. The store has a constant stream of new ideas, new offerings, new departments and brands, meaning it remains fresh and maintains that vibe of excitement.

In business copying is a waste of time. M&S cannot be Selfridges, any more than Debenhams, HoF and John Lewis further up the street can. Nevertheless, retailing is an industry where pretty much everyone’s trading secrets are there to see on the sales floor. You can learn from the winners and incorporate elements of their thinking into your own.

UK retailing has become far too corporate for this trading market. When pleasing shareholders is deemed to be more important than pleasing customers the alarm bells should start ringing. The M&S leadership team has vastly overrated the importance of lowering prices. Their customers are far more interested in relevant, quality product. The business will continue to decline for as long as they have these fundamental factors the wrong way around. And Selfridges goes from strength to strength, investing more and more into progressively improving its core.

Yesterday it was Monsoon. The day before, Office is apparently also considering a CVA. In recent weeks Arcadia “successfully” persuaded its landlords to keep the life support machines on for longer. Philip Green then told landlords via the Today programme that Arcadia hadn’t been anywhere near close to going under. However, this does sound close to him telling them they have been legged over. How many of them already knew this is a moot point. What is clear however, is that a successful CVA vote is in no way a vote of confidence in whichever retailer we may be talking about. It reflects the plummeting confidence landlords have in their own offering – retail property is no longer the licence to print money it once was. Supply greatly exceeds demand.

For retailers, this distress we are seeing is just the beginning. Indeed, CVAs, pre-packs and other lifelines are ensuring the turmoil will last longer and be more damaging. Stakeholders are demonstrating an extraordinary appetite for denial. One of the striking aspects of this current narrative of distress and restructuring is that it only ever applies to costs. Too many  retailers believe that if they lower their costs, everything will be fine. It won’t.

Preventing market forces exerting natural selection is like ignoring the root causes of an illness and simply treating the symptoms. Will lower rents make Arcadia’s brands better able to reverse market share declines? Will they allow Monsoon to move away from its highly stylised branding and create a totally different, relevant handwriting? Without focusing on the key problems – weak propositions, weak brands with too many options – they are certain to get worse. The clock is ticking.

We are seeing unprecedented turmoil across the industry. So far, the reaction has been mostly panic, with little coherent thinking. The success record of CVAs is awful. I see no sign of that changing at all.

** We support retailers and stakeholders with strategic advice. If you think we can help, drop me a line – richard@richardtalksretail.co.uk

It’s been great to see an uptick in consumer demand over the past 6 weeks or so. This follows a torrid period since midway through last year. 2018 softened as the year unfolded. Christmas really was as bad as feared and the industry entered 2019 with far less cash than it wanted, and in many cases, needed.

This reality has been reflected in growing distress, with casualties of one form or another up year on year. Admins, pre-packs, CVAs and programmes to reduce staff and stores have become the staple diet of retail news. Throw in some M&A that is much more corporate than strategically coherent and chaos seems to describe today’s retail landscape.

So the recent better figures have been especially welcome. Many may be sucked into thinking that the worst is over and “normal” service has resumed. We are still very much in the woods of very soft demand, oversuppy a cautious consumer all too ready to delay, and often postpone, purchasing.

Last years “beast from the east” made for some spectacularly weak comps. Very moderate demand looked like strong growth on the back some wonderful Spring weather. The timing of Easter coming later also boosted spending. Don’t be fooled. Underlying structural weakness cannot be solved with a few weeks of better sales figures which cannot be sustained. This remains a chronically oversupplied industry and only large-scale closures can deliver the much-needed reset of supply and demand. Until then, we will continue to see the results of deteriorating trading economics.

** We support retailers and stakeholders with strategic advice. If you think we can help, drop me a line – richard@richardtalksretail.co.uk

Fifteen years ago, online retail sales were more or less zero. Today they are worth almost £70 billion. Far from making room to accommodate the new channel, total floorspace has actually increased a little over the period. Meanwhile, online has progressively cannibalised that footage rather than create new demand. And this cycle continues – online continues to suck business out of stores and add capacity.

Not surprisingly, this has impacted trading economics although it has taken time to really hit. Now we are seeing the implications begin play out in the shape of distress. Admins, CVAs, job cuts etc have become the staples of retail news flow. And most of the narrative around these events and indeed, around the broader industry discourse, focuses on onerous costs and particularly, property. It is certainly true that rental levels are totally unsustainable. Even without going into a process of some kind, retailers are looking to negotiate rental reductions wherever they can.

While rising costs and property prices are undoubtedly pressing issues,  the reality is they are symptoms of a more fundamental issue that goes to the very heart of retail today. Retail is simply not good enough at retailing aka selling. After generations of demand growth in a physically immature industry, we now have saturation in what is to all intents and purposes, a retail recession. Too many players with too much capacity. And this is increasingly exposing deficiencies in so many retail business models.

Reducing costs and rents is important but admins, CVAs, changes in ownership etc are all tinkering at the margins. In themselves, they will not make the business a better retailer. And this is an existential challenge. Unless the word restructure starts to be applied to the top line, not just the cost line, these sticking plasters have zero chance of curing the patient.

** We support retailers and stakeholders with strategic advice. If you think we can help, drop me a line – richard@richardtalksretail.co.uk